Blue Dart's Gupte pioneers India's air cargo market

Nobody has more experience in the Indian air cargo market than Niteen Gupte. For 10 years the former Indian air force pilot has led Chennai-based Blue Dart Aviation, which for nearly all that time has been India’s only cargo airline.

In many ways, Gupte helped create India’s air cargo industry. He says before the carrier launched in June 1996 all of India’s aviation infrastructure and regulations were based on passenger operators, so Blue Dart and Gupte had to help Indian authorities write cargo regulations and procedures. “We were the first ones to get that going with the government,” he says, adding the process was so long “my hair turned all white”.

All the legwork Gupte did a decade ago is now making it easier for new cargo airlines to launch because the same regulations are still in place. First Flight Couriers became India’s second cargo airline in September, Flyington Freighters is planning to launch next March and several other potential start-ups are targeting India’s fledgling but fast-growing cargo market.

“It’s easier for them now,” says Gupte. “At least now there’s a difference [from a regulatory perspective] between cargo and passengers.”

Gupte joined Blue Dart after a stint as executive director of Span Aviation, a small Indian turboprop operator that subsequently shut down. He has been chief executive of Blue Dart Aviation since it was established in 1996 by Blue Dart Express, India’s largest courier which has been in business since 1987 and for the first nine years relied on passenger carriers to fly its express product. In 2005 Blue Dart Aviation was separated from Blue Dart Express after the latter was acquired by DHL and Gupte added the managing director title. Blue Dart Aviation, which remains Indian owned, now flies almost exclusively for DHL subsidiary Blue Dart Express and earlier this year added two Boeing 757-200s leased from DHL subsidiary European Air Transport.

The 757s join a fleet of five Boeing 737-200s. Gupte says the carrier plans to add three more 757s over the next three years “possibly from another DHL affiliate or another source”.

“Our plan is to get a 757 every April through 2009,” he says. “We’re in active negotiations now.”

One additional aircraft per year does not seem very ambitious given India’s booming cargo market, which is expected to chalk up double-digit growth figures for at least the next five years. “It’s conservative but it’s meeting the demand adequately,” Gupte says, pointing out one 757 is equivalent in capacity terms to two 737s.

“We look at the market on a regular basis. If we think we need to bring the capacity in we’ll bring it.”

Blue Dart could add capacity to target other sectors of the cargo market but Gupte is not interested in carrying general cargo because it has lower yields. “We’re primarily in the express business. Cargo is not our main product,” he says.

Blue Dart now offers 250t of capacity per night with an average load factor of 80% and an average package size of 9.2lb/ft3. Its point-to-point network operates from 11pm to 7am, linking seven Indian cities. Each night the carrier runs four 737s and two 757s with the fifth 737 primarily uses as a spare. It carried 42,000t of cargo last year and in the first nine months this year had already carried 37,000t.

The introduction of the 757s has allowed Blue Dart to launch routes to Ahmedabad and Hyderabad, secondary Indian cities which Blue Dart previously only served by buying belly space from passenger carriers. Over time, Gupte believes demand will be sufficient to upgrade its 737 markets to the 757. “If the market keeps growing we’ll have an all 757 fleet by 2010,” he says.

Blue Dart may add a few more domestic cities to its network but Gupte says it could keep its network at seven cities because most of the remaining cities are close enough to its existing destinations to be served by trucks. It has been looking at launching services to neighbouring countries but demand for express cargo services between India and other South Asian countries such as Bangladesh, Nepal and Sri Lanka for now is adequately met by passenger aircraft bellies.

“We’ve looked at regional markets and keep looking at it. When it becomes a commercial proposition we’ll get into the regional market,” Gupte says.

Blue Dart is not interested in adding widebodies and launching long-haul services partly because DHL, which now buys space on Lufthansa India-bound freighters and wet-leases Boeing 727s which connect India with Southeast Asia, is already in this market. But the domestic market should keep Blue Dart busy enough.

The express cargo market grew 22% last year according to Gupte and Blue Dart’s business plan banks on this rate, driven by India’s fast-growing economy, continuing for the next several years. “We believe it will happen for quite some time,” Gupte says.

This growth could be curtailed by a lack of cargo infrastructure at India’s airports. “We do have an airport infrastructure problem,” Gupte acknowledges. “Space is a problem at all airports – parking space and airside warehouse access.”

But Gupte is encouraged by the construction of new cargo-friendly airports in Bangalore and Hyderabad and the recent privatisation of India’s two largest airports, Delhi and Mumbai. He says the new consortia now operating the two airports are looking at cargo requirements and Gupte is confident they will address Blue Dart’s needs.

The government is also starting to encourage air cargo for the first time and is trying to eliminate any barriers threatening its growth. “They didn’t promote it [for years]. There’s been a considerable sea change in how the government approaches aviation,” Gupte says.